Vancouver-based Fremont Gold has announced that it will sell its rights and interests in the Gold Canyon project, in Nevada, for 300 000 shares in NYSE- and TSX-listed McEwen Mining.
Gold Canyon is surrounded by claims that comprise McEwen’s Gold Bar mine and is one of five satellite pits to the original Gold Bar mine, that operated from 1986 to 1994.
Fremont says that McEwen’s Gold Bar project includes the other four satellite pits to the original Gold Bar mine: Gold Pick, Gold Ridge, and two pits at Cabin Creek. Gold Canyon is about 900 m north-west of McEwen’s Gold Ridge pit and is part of the same mineralised system.
McEwen poured first gold at its Gold Bar mine in February and is targeting production of 42 000 oz of gold at a cash cost of $975/oz in 2019 – its first year of production.
“Selling Gold Canyon appreciably increases Fremont’s financial flexibility,” Fremont CEO Blaine Monaghan said on Friday.
“It gives us the ability to generate a significant non-dilutive capital infusion, through the sale of any McEwen shares, which will be helpful as we evaluate opportunities that can add immediate and long-term shareholder value.”
Fremont aims to acquire an advanced-stage gold project that has the potential to host an economic deposit with a minimum of one-million ounces of gold in the Western US.
The common shares of McEwen to be issued under the agreement will be subject to a four-month hold period from the date of closing and are subject to regulatory approval. The agreement is expected to close by August 23, 2019.
Fremont has an option to earn a 100% interest in Gold Canyon by making payments totalling $802 500 to Ely Gold Royalties over a five-year period.
McEwen’s share price traded at C$2.32 a share on the TSX on Friday.